Since its 1913 founding, the U.S. Federal Reserve has been allowed to operate in such relative secrecy it has been described as “like a hall of mirrors and the Fed is that big one at the end that makes everything else look like its upside-down.” Rand Paul’s goal is to unite conservative Tea Partiers, Liberal Progressive and Millennials in a grand coalition to restrain the crony capitalism between Washington DC lobbyists and Wall Street money interests.
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Sunday, October 27, 2013
Stop Yellen’s Appointment, Stop Cronyism: Rand Paul
Rand Paul’s Goal in Holding up Janet Yellen’s Appointment
Senator Rand Paul woke up the Washington political scene on October 25th by leaking a story that he intends to place a “” on the upcoming Presidential nomination of Janet Yellen to be the next Chairperson of the U.S. Federal Reserve; unless Senate Majority Leader Harry Reid allows his “Audit the Fed” bill to go to a Senate floor vote.
By Chriss Street
The one-time mandated audit of emergency lending activities during is the only published glimpse into the secretive financial dealings of Fed. The audit divulged that the Fed had directly loaned over $16 trillion to selected banks and corporations. Few doubt the importance of the Fed providing temporary liquidity to stabilize markets after the huge investment firm of filed bankruptcy on September 15, 2008. But for the last five years the Fed has continued to use its money printing capability to dramatically subsidize bank big profitability with artificially low interest rates; causing small banks to shrivel and seniors who rely on the income from savings deposits to suffer badly.
Current Federal Reserve Chairman has vigorously opposed annual audits of the Fed by claiming that any transparency might hamper the Fed’s ability to quickly and creatively spur an economy that is teetering on recession. But many Left, Right and Libertarian economists believe the Fed’s discretionary actions only serve the interests of the powerful and are often counter-productive to small business and American workers.
Five years after the banks were bailed out by the American taxpayers; the U.S. banking system is generating record profits thanks to $3.6 trillion of the Fed’s generosity. But despite the Fed money printing, over the last two years employment has been treading water by growing at the same 1.7% rate as the annual population growth. Failing to grow jobs faster than new entrants join the labor force also caused the duration period of unemployment to rise from 10-20 weeks from 1980 to 2009, to 35-40 weeks recently.
The Fed also allowed a substantial increase in risk taking by financing bank’s dominate position in leveraged derivative speculation. Powered by the Fed’s cheap money, trading and investment banking activities generated of JPMorgan annual profit of $24.4 billion reported in July. Without a Fed audit, no outsider can be exactly sure how much risk American banks are taking with derivatives. But with the world’s annual economy of only and the outstanding derivatives having grown rapidly to ; the leverage must be enormous.
Since the Federal Reserve System is officially owned by its member banks and its Board and Chairman are appointed by the Senate, the Fed as an “independent entity within government.” However, the Federal Reserve’s activities have almost never been subject to any oversight by Congress. Consequently, the Federal Reserve seems to be “independent of government.”
Perhaps the real reason Congress has taken a hands-off approach is the Fed is highly profitable and under , a big cut of that profit is paid each year as a dividend to the federal government. Although under law the Fed’s dividend is supposed to “supplement the gold reserve held against outstanding United States notes” and pay down the “outstanding bonded indebtedness of the United States”, Congress has been spending the Fed’s for many years.
Rand Paul under the has the right to prevent a motion for the nomination of Janet Yellen from reaching a vote on the Senate floor. Majority Leader Harry Reid has used the same Senate rules to prevent a vote on Paul’s “” bill, introduced with 25 bipartisan sponsors in February 2013.
Over 70% of the American public has Auditing the Fed for years, but it was Rand Paul’s octogenarian father, Congressman Ron Paul, that became a rock star on college campuses a millennials’ revolt to force the audit and eventual abolishment of the Federal Reserve for debasing the dollar and crony capitalism.
By forcing Harry Reid and his Senate allies who secretly oppose “Audit the Fed” to go on record with a very unpopular roll call vote, Senator Paul is demonstrating his principled leadership and the building a powerful new coalition of American voters.
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